RMB Internationalization and BOC cross …...1 Global Trade Services dept. Bank of China April 2018...

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Global Trade Services dept.Bank of China

April 2018

Introduction of BOC’s white paper on

RMB Internationalization and BOC

cross-border/offshore RMB Index

Contents

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Policies & Market Prospects

BOC Products & Services

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2

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1. RMB Internationalization Policy framework

2009 2010 2011 2012 2013 2014 2015 2016

• RMB trade transactions

• ‘3 types of institutions’ investing in the interbank bond market

• RMB FDI by overseas corporations

• RMB ODI by domestic corporations

• RQFII

• Expanding of RMB export enterprises

• Simplify the procedures for RMB cross-border transactions

• FDI by overseas financial institutions

• Centralized Cross-border RMB fund operation by multinational corporations

• Hong Kong-Shanghai stock connection

• RQDII• RMB cross-border usage in

pilot free trade zone (Shanghai)

• Foreign central banks, international financial institutions and sovereign wealth funds invest in interbank bond market

• RMB cross-border usage in pilot free trade zone (Guangdong Fujian Tianjin)

• RMB officially included in SDR• Hong Kong-Shenzhen stock

connection

2017-2018

• Bond Connect• Cross-border financing

macroprudential management

• the Circular on Further Improving RMB Cross-Border Business Policies and Facilitating Trade and Investment

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1

2

3

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No.2 most frequently used currency in China’s Cross-border Transaction (SAFE)

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6 RMB had accessed to almost 200countries

China had signed Currency Swap Agreement with 36 countries or regions

2. Present Situation of RMB

No.5 most frequently used currency in global payment (SWIFT)

No.7 most frequently used currency in foreign reserve (IMF)

No.8 most frequently used currency in global FX trading (BIS)

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• RMB has functioned as the international payment currency.

The currency allocation of China’s cross-border payment and receipt

(2017)

USD; 71,64%

CNY; 18,27%

EUR; 3,93%

JPY; 1,62%

The shares of international payment currency (2018.1)

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• IMF releases quarterly data on the currency composition of official foreign exchange reserves (COFER),

separately identifying holdings in RMB for the first time in 2017. RMB ranked 7th in the global reserve

currencies.

• BIS released the triennial survey on the central banks in 2016, which identified RMB as the 8th most

frequently used foreign exchange currency.

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RMB Trade Settlement

Inbound

Mainland ChinaMainland China

• Cross-border goods and service trade settlement in RMB are effectively unrestricted

RMB Direct Investment

RMB lending / borrowing

RMB liquidity management

Schemes

• The process of inward and outward direct investment in RMB is also allowed

Mainland ChinaMainland China• Onshore entities extend an intra-group loan in RMB to their offshore

associated companies

Mainland ChinaMainland China

• Chinese and foreign multinationals can sweep RMB funds in and out of China through a cross-border cash pooling structure, subject to prior PBOC registration

• Chinese and foreign enterprises can issue RMB denominated bond both in Chinese domestic market (‘Panda bond’) and in offshore RMB market (‘Dim Sum bond’)

3. Enterprises’ Practical Demands

Alternative sources of financing

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• Explore business in China: investing in the Chinese market in RMB, and share China's economic growth yield.

• Expand business areas: providing customers with a broad range of products such as cross-border settlement, clearing,

exchange, bond issuance & underwriting, investment and wealth management in RMB, extending the service scope and

gaining profits.

• Extend customer base: Delivering RMB settlement, investment and financing services to Chinese enterprises and their

overseas counterparties, and extending customer base.

• Improve global strategic deployment: with the wider acceptance of RMB worldwide and faster development of offshore

RMB market, financial institutions will provide services in more extensive regions and seek global operation.

Trade

settlement in

RMB

RMB

deposits &

loans

Offshore

RMB

exchange

RMB

custody

RMB trade

financing

RMB

account

services

RMB bondsRMB

DF/NDF

4. Financial Institution’s Opportunity

Contents

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Policies & Market Prospects

BOC Products & Services

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1. A brief Introduction of BOC

Domestic head

office and

branches; overseas

branches,

subsidiaries and

representative

offices; BOCHK

BOC

Investment

Management

BOC

Aviation

BOC

Investment

BOC

Insurance

BOC

International

BOC Group

Commercialbanking

Investmentbanking

Insurance Equityinvestment Fund

Aircraft

leasing

• BOC has a unique integrated financial service platform that provides a full range of financial

services, including commercial banking, investment banking, insurance, asset management, aircraft

leasing and other financial products, in order to meet the complicated business needs of different

customers.

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人民币海外代付协议付款

跨境组合跨境

转汇款

✓Cross-border RMB settlement✓RMB import/export financing✓Cross-border RMB guarantee✓Cross-border RMB refinancing✓RMB supply chain financing✓Cross-border RMB factoring✓Cross-border RMB forfaiting

… …

✓RMB deposits ✓Cross-border RMB loan from domestic banks to overseas project✓Cross-border RMB loan from overseas banks to domestic companies✓Cross-border RMB advisory service… …

✓Account opening✓Cross-border RMB cash management✓Overseas institutional account services✓RMB wealth management✓RMB notes… …

✓RMB spot trading✓RMB forward trading✓RMB swaps✓Overseas RMB bond issuance✓Panda ✓RMB agency investment … …

All-dimensional

cross-border

RMB services

Cashmanagement

FX and globalMarket

Trade finance

Corporate banking

2. RMB Products overview

100

321

276

229233

248257

257

Dec-11 Dec-12 Dec-13 Jun-14 Oct-14 Feb-15 Jun-15 Oct-15 Feb-16 Jun-16 Oct-16 Jun-17

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3. Market Research - Cross-border RMB Index (CRI)

•CRI is a comprehensive index which reflects the degree of RMB activity in cross-border transactions and the development

situation of RMB internationalization.

•The index is composed of three well-knit parts to reflect the degree of RMB activity in cross-border outflow, overseas circulation

and cross-border inflow.

CRI for the 4th quarter 2017

•The activity of cross border use of

RMB stabilized at the highest level of

the year.

•The expectations on the international

status of RMB is optimistic and the

role of RMB as an international

currency further enhanced.

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•ORI tracks the RMB’s offshore indicators, including the amount of deposits , loans and trading volume, to reflect the currency’s

level of involvement in global trade and investment.

•The index illustrated the RMB’s rapid rise in global trade and investment, which is to continue over the next years.

•The 1.22 percent reading for the RMB grew from 0.07 percent at the end of 2016, and 0.9 percent at the end of 2011.

3. Market Research - Overseas RMB Index (ORI)

0,32%

0,33%0,42%

0,59%

0,75%

0,91%

1,13%1,20%

1,37%1,40%

1,30%

1,26%

1,35%1,29%

1,15%

1,17%

1,19%1,22%

Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17

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Introductions

• BOC has compiled the White Paper on RMB Internationalization exclusively

for five consecutive years since 2013

• This year’s market survey includes 3,134 industrial and commercial

enterprises and 118 financial institutions, covering 25 foreign countries and

regions

3. Market Research – White Paper on RMB Internationalization

Distribution of Overseas Respondents by Region

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• Both domestic and overseas market entities have higher expectations for the international currency status of RMB

• Over 60% of surveyed market entities will use RMB or increase RMB use


Expectations of Surveyed Commercial Enterprises for the

International Currency Status of RMB

Percentage of Overseas Commercial Enterprises Planning to

Use RMB or Increase RMB Use

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• RMB use by market entities remained concentrated on cross-border payment

• 74% of the surveyed overseas enterprises use RMB for cross-border payment

• 25% hold RMB-denominated assets or liabilities in addition to using the currency for cross-border payment


Areas of RMB Use by Overseas Enterprises

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• participating will in commodity trading is relatively strong

• Around 80% of the surveyed overseas enterprises are interested in participating in China’s domestic commodity

trading and joining commodity trading platforms.

• This is of positive significance to reinforcing RMB’s function of pricing commodities.


Interested in Participating in Commodity Trading in China or Not

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• RMB is an important alternative option as financing currency

• 73% overseas surveyed commercial enterprises,59% overseas banking institutions,68% overseas securities,

investment banking and insurance institutions will consider RMB as an important alternative option in the case of a

liquidity squeeze.


Different Market Entities Considering RMB as a Key Financing Currency

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• RMB use of Fortune 500 enterprises is more extensive than of other entities

• more than 62% of the surveyed Fortune 500 enterprises have used at least two types of cross-border RMB products

and services, 30 percentage points higher than the proportion of small and medium-sized enterprises (SMEs) doing

the same.

• 32% have used at least 3 types of cross-border RMB products and services, 29 percentage points higher than the

proportion of SMEs doing so.


Distribution of Cross-border RMB Product Types and Quantities Used by

Different Types of Enterprises

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• The “Belt & Road” hold great potential for expanding RMB use

• 71% surveyed enterprises from countries along the “Belt & Road” have used at least one type of cross-border

RMB products and services, whereas 29% have used at least two types.


Distribution of Cross-border RMB Product Types and Quantities Used by

Enterprises along the “Belt & Road”

❖ The only bank with a century-long operating history in

China.

❖ The first "global systemically important financial institution"

in emerging economies

❖ The first bank engaged in trade finance in mainland China .

❖ Most internationalized and diversified bank in China.

- 600 overseas branches, subsidiaries and representative

offices in 54 countries and regions;

- Over 1,600 correspondent banks across the world;

❖The world's largest bank in terms of international settlement

volume and cross-border RMB settlement.

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4. BOC Superiorities

Thank You

RMB Internationalization and BOC cross …...1 Global Trade Services dept. Bank of China April 2018...

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Transcript of RMB Internationalization and BOC cross …...1 Global Trade Services dept. Bank of China April 2018...